Work out how much a funding round shrinks your stake, including the effect of topping up an option pool as part of the deal.
Your share of the cap table before this round.
What the company is valued at before the new money goes in.
New investment coming in during this round.
Many investors ask for a fresh option pool created out of the pre-round cap table. Set 0 if there is no new pool. A typical ask is 8 to 15 percent.
How this works
Post-money valuation is pre-money plus the amount raised. The new investor owns the amount raised divided by the post-money valuation. On a £4m pre-money with £1m in, that is £1m of £5m, so 20 percent.
Everyone who held shares before the round shares the remaining percentage in the same proportions as before. If you owned 70 percent and the investor takes 20 percent, your stake falls to 70 percent of the remaining 80 percent, which is 56 percent.
The option pool here is modelled as new shares created in the round (a post-money pool), so it dilutes existing holders on top of the investor. With a 10 percent pool your 70 percent would land at 49 percent. Assumptions: a single priced round, no convertibles or SAFEs converting at the same time, and a pool taken from existing holders rather than the new investor. Always check the term sheet, as a pre-money pool dilutes only the existing holders and changes these numbers.